Question

If the unit selling price is $2.50 and the unit cost is $1.00, what action is needed to maintain the gross margin percentage when unit cost increases $0.25?

Answer 1

$1 to make
price is $2.50
This is a 250% increase.

If it costs $1.25 to make...
250% of $1.25 = $1.25 × 2.50 = $3.125 for the new price if we want to keep that 250% increase. Since there is no half cent, we round up to $3.13.

To maintain the gross margin percentage, we would have to up the unit selling price 63¢ to $3.13.